SCHEDULE 13D: Fairmount Funds Management Discloses 19.99% Stake in Newly Merged Crescent Biopharma, Inc. Following Strategic Investment and Redomestication

Fairmount Funds Management LLC and its affiliates have disclosed a significant 19.99% beneficial ownership in Crescent Biopharma, Inc. following the recent merger and associated financing activities, including a $44 million investment.

Summary

• Fairmount Funds Management LLC, Fairmount Healthcare Fund II L.P., Peter Evan Harwin, and Tomas Kiselak (collectively, the "Reporting Persons") jointly reported beneficial ownership of 3,124,220 Ordinary Shares of Crescent Biopharma, Inc., representing 19.99% of the outstanding shares as of June 16, 2025.
• The reported shares include 1,387,866 Ordinary Shares, 1,736,000 Ordinary Shares issuable upon conversion of 1,736 Series A Preferred Shares, and 354 Ordinary Shares issuable upon exercise of Pre-Funded Warrants.
• The aggregate purchase price for the Ordinary Shares and Pre-Funded Warrants was $40,000,000, and for the Series A Preferred Shares was $4,000,000, funded from the general working capital of the Reporting Persons.
• The ownership stake is a result of a series of transactions, including an initial financing in September 2024 where Pre-Merger Crescent issued 20,000,000 preferred shares to Fund II at $0.20 per share.
• The filing details the merger of GlycoMimetics, Inc. (now Crescent Biopharma, Inc.) with Pre-Merger Crescent, which became effective on June 13, 2025, leading to the conversion of various securities into new Company shares and warrants.
• Crescent Biopharma, Inc. completed a redomestication from Delaware to the Cayman Islands on June 16, 2025, changing its governing law and corporate documents.
• A Certificate of Designation for Series A Non-Voting Convertible Preferred Shares was filed on June 16, 2025, granting holders specific rights, including the ability to elect two Preferred Directors with three votes each, provided at least 30% of the originally issued Series A Preferred Shares remain outstanding.
• The Series A Preferred Shares are convertible into Ordinary Shares at a 1:1,000 ratio, subject to a beneficial ownership limitation of 19.99%, which automatically reduces to 9.99% if Fairmount and its affiliates own 9.0% or less of Ordinary Shares.
• Certain executive officers, directors, and shareholders, including the Reporting Persons, entered into 180-day lock-up agreements post-merger.
• A Crescent pre-closing financing, detailed in a Subscription Agreement dated February 14, 2025, involved new and existing investors committing approximately $200.0 million.
• A Registration Rights Agreement requires the Company to file a resale registration statement with the SEC within 45 calendar days following the merger closing.

Sentiment

Score: 7

Explanation: The document indicates a significant strategic investment and corporate restructuring, suggesting a positive long-term outlook from the investor's perspective, despite the inherent risks of the biopharma sector. The detailed governance provisions for preferred shareholders also add a layer of stability.

Positives

• Fairmount Funds Management and its affiliates have made a substantial investment of $44 million in Crescent Biopharma, indicating strong investor confidence.
• The merger and associated financing activities have consolidated the company's structure and capital base.
• The Series A Preferred Shares provide significant protective provisions for preferred shareholders, including the right to elect two directors and veto certain corporate actions, ensuring a degree of oversight and stability for major investors.
• The Registration Rights Agreement ensures liquidity for investors by requiring the company to file a resale registration statement promptly after the merger.

Negatives

• The beneficial ownership limitations on the conversion of Series A Preferred Shares and Pre-Funded Warrants mean that not all held securities can be immediately converted into Ordinary Shares, potentially limiting immediate liquidity or full voting power for the Reporting Persons.
• The 180-day lock-up agreements restrict the ability of certain shareholders, including the Reporting Persons, to sell or transfer Ordinary Shares or convertible securities for a specified period post-merger.

Risks

• The beneficial ownership limitations on Series A Preferred Shares and Pre-Funded Warrants could restrict the Reporting Persons' ability to fully convert their holdings into Ordinary Shares, potentially impacting their influence or liquidity.
• The success of the newly merged entity, Crescent Biopharma, Inc., and the value of its shares are subject to the inherent risks of the biopharma industry and the execution of its strategic plans.
• The redomestication to the Cayman Islands changes the governing legal framework for the company's internal affairs, which could introduce new regulatory or legal complexities.

Future Outlook

The company is required to file a resale registration statement with the U.S. Securities and Exchange Commission within 45 calendar days following the closing of the Merger, which will facilitate the liquidity of certain registered securities. The beneficial ownership limitation for Series A Preferred Shares will automatically reduce to 9.99% if Fairmount and its affiliates beneficially own 9.0% or less of the Ordinary Shares.

Management Comments

• Peter Harwin serves as a member of the board of directors of the Company, and, in such capacity, may have influence over the corporate activities of the Company.
• The Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, although, the Reporting Persons, at any time and from time to time, may review, reconsider and change their position and/or change their purpose and/or develop such plans and may seek to influence management or the board of directors of the Company.

Industry Context

This filing reflects a significant investment and corporate restructuring within the biopharma sector, a common strategy for emerging companies to secure funding and optimize their corporate structure for future growth and market access. The merger and subsequent redomestication are indicative of strategic maneuvers to enhance operational flexibility and potentially attract broader international investment.

Comparison to Industry Standards

• The beneficial ownership limitations (e.g., 9.99% for warrants, 19.99% for preferred shares) are common mechanisms in financing agreements to prevent immediate triggering of certain regulatory thresholds or to manage control dynamics, similar to those seen in venture capital or private equity investments in biotech startups.
• The 180-day lock-up period for insiders post-merger is a standard practice in public market transactions, aligning with typical lock-up durations observed in IPOs or de-SPAC transactions to ensure market stability after a significant corporate event.
• The requirement for a resale registration statement within 45 days is a standard provision in private investment in public equity (PIPE) or similar financing rounds, ensuring that investors have a pathway to liquidity for their shares, comparable to agreements seen with companies like Moderna or BioNTech during their early public financing stages.

Management Changes

Corporate Governance

Related Party Transactions

• Fairmount Funds Management LLC serves as investment manager for Fairmount Healthcare Fund II L.P. and is entitled to a fee based on a percentage of Fund II's net asset value.
• Peter Harwin and Tomas Kiselak are managing members of Fairmount Funds Management LLC and are also reporting persons with shared voting and dispositive power over the securities.

Stakeholder Impact

• Shareholders: The merger and associated financing activities, including the significant investment by Fairmount, could stabilize the company's financial position and provide capital for future operations. The lock-up agreements temporarily restrict sales by certain insiders, potentially reducing selling pressure. The redomestication changes the legal framework governing their rights.
• Investors (specifically Fairmount and affiliates): Their substantial investment and the protective provisions of the Series A Preferred Shares grant them significant influence and safeguards within the company's governance structure.
• Management: The presence of Peter Harwin on the board, representing a major investor, suggests increased oversight and potential influence on strategic decisions.

Next Steps

• The Company is required to prepare and file a resale registration statement with the U.S. Securities and Exchange Commission within 45 calendar days following the closing of the Merger.
• Fairmount and its affiliates may review, reconsider, and change their position and/or purpose regarding their investment and may seek to influence management or the board of directors of the Company.

Key Dates

Keywords

Crescent Biopharma, Fairmount Funds Management, Schedule 13D, Beneficial Ownership, Merger, Biopharma, Preferred Shares, Pre-Funded Warrants, SEC Filing, Investment, Corporate Governance, Redomestication, Lock-up Agreement, Registration Rights